Wednesday, March 18, 2009

Government's "Angry-come-lately" on AIG

A seemingly good article by Steven Pearlstein at the WaPo on various ways we could've avoided paying the AIG bonuses without causing a crisis in the rule of law, as has been implied or even said by Wall Street, various members of the O Administration, and the media. The thing that gets me about this whole deal is that it obviously wasn't an unanticipated problem -- they (AIG) knew about the bonuses beforehand, and had to have known how it would play, and various articles have pointed to commentary from within the government with various officials having said things to the effect of "we knew about it earlier, but we couldn't really do anything so we didn't." Pearlstein makes some very commonsense articles that it was within both the government and AIG's power to take some reasonable steps much earlier to have avoided this whole shennanigan. For one thing, since the US Gov helped stop AIG from going into bankruptcy, Pearlstein points out:
Call me a cockeyed optimist, but I suspect that when confronted with the prospect of a bankruptcy and a prolonged and public investigation, the sharpies in London and Connecticut might have been receptive to the idea of renegotiating those bonuses in favor of new contracts -- contracts that increased their base pay but tied their bonuses to success in reducing future taxpayer liabilities at AIG. Unfortunately, none of this seems to have occurred to Eddie "Good Hands" Liddy, the former Allstate executive who was supposedly brought in to dismantle AIG and sell it off in pieces for the benefit of the taxpayers and creditors. So far, all Eddie seems to have served up is a litany of complaints about what a bad hand he was dealt.

Read on the rest of "Wall Street's Dangerous Refusal to Learn" here.

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